Bessette/Pitney’s AMERICAN GOVERNMENT AND POLITICS: DELIBERATION, DEMOCRACY AND CITIZENSHIP reviews the idea of "deliberative democracy." Building on the book, this blog offers insights, analysis, and facts about recent events.

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Tuesday, October 14, 2014

Obamacare Problems

A report out today from the Republican staff of the Senate Budget Committee highlights a critical point about Obamacare: The law’s negative effect on labor markets helps explain why it will increasedeficits by $131 billion over the next 10 years. This finding stands in stark contrast to Democrats’ repeated assertions that the law will reduce the deficit.

The public dialogue on Obamacare has thus far largely focused on how the law affects premiums and limits access to certain health insurance plans or doctors. While these side-effects are troublesome, it is perhaps more significant that Obamacare has had -- and will continue to have -- a substantial impact on labor markets, jobs and the budget picture.

Obamacare appears to affect employment in two ways: It decreases the supply of labor (the number of people in the labor market), as well as the demand for labor (the number of jobs available). This phenomenon was aptly named the “health care employment squeeze” in a study released by the American Health Policy Institute last month. In short, Obamacare creates an employment double whammy: The cost to many employers of hiring workers goes up, since those with more than 50 employees have to provide increasingly expensive health care, while employees’ incentives to work go down, because they can get federal subsidies to buy insurance outside the workplace.

Obamacare premiums aren’t rising everywhere. They just have a way of finding the states with the biggest Senate races. And that could be very bad timing for Democrats in two of the party’s key contests.

Double-digit rate hikes for individual health insurance plans have become an issue in the Louisiana and Iowa Senate races over the past week, where the Republican candidates are hammering their Democratic opponents for the steep premium increases on the way next year for some customers under the Affordable Care Act.